COMP7880: E-Business Strategies
Introduction
Dickson K.W. Chiu
PhD, SMIEEE, SMACM, Life MHKCS
Jelassi & Enders: Chapter 1-2
1
Tentative Topics
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Introduction and overview
External and internal analysis
Strategy options in e-business markets
Sustaining competitive advantage
Exploiting new market spaces
Strategy for internal organization
Strategy for interaction with suppliers
Strategy for interacting with customers
Creating effective web presence
Mobile Commerce
Web 2.0 Environment and Social Networks
COMP7880-Intro-2
Scope of Electronic business
e-business
Electronic
commerce
Mobile
e-commerce
Source: Adapted from D. Chaffey, 2002, p. 9.
COMP7880-Intro-3
The focus of the cases is on corporate
level and business unit strategy
Corporatelevel strategy
Business unit
strategy
Operational strategy
Corporation
Business
unit A
R&D
Business
unit B
Production
Business
unit C
Etc.
COMP7880-Intro-4
Different stages of technological
revolutions as their diffusion increases
Degree of diffusion
of the technological
revolution
INSTALLATION PERIOD
DEPLOYMENT PERIOD
Previous
great
surge
5
Maturity
4
Synergy
(‘golden age')
2
3 Crash
Frenzy
(‘gilded age')
1
Irruption
Big
bang
Next
great
surge
Next
big bang
Time
Source: Adapted from C. Perez, 2002, p. 48.
COMP7880-Intro-5
Major technological revolutions in
history
INSTALLATION PERIOD
DEPLOYMENT PERIOD
Technological
revolution
1
2
(core country)
'Irruption'
'Frenzy'
'Crash'
1770s and early
1780s
late 1780s and
early 1790s
crash in 1797
1798–1812
1813–1829
1830s
1840s
crash in 1847
1850–1857
1857–1873
1875–1884
1884–1893
crash in 1893
1895–1907
1908–1918
1908–1920
1920–1929
crash in 1929
1943–1959
1960–1974
The Industrial Revolution
(Britain)
Age of steam and railways
(Britain, then spreading to
Continental Europe and
the USA
Age of steel, electricity,
and heavy engineering
(USA and Germany
overtaking Britain)
Age of oil, automobiles
and mass-production
(US, then spreading to
Europe)
Source: Adapted from C. Perez, 2002, p. 57.
3
4
5
'Synergy'
'Maturity'
Timeline
COMP7880-Intro-6
e-business and NASDAQ in the past decade
1
2
'Grassroots
of e-business'
NASDAQ
Points
4
3
'Stock market
crash'
'Rise of the Internet'
'Synergy'
– 45%
5000
4500
4000
3500
3000
2500
2000
1500
1000
500
0
1994
1995
1996
1997
Launch of
Amazon.com
Source: NASDAQ quotes taken from Factiva.com.
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Year
COMP7880-Intro-7
Definitions of strategy




Gerry Johnson and Kevan Scholes - the direction and scope of an
organization over the long-term, which achieves advantage for the
organization through its configuration of resources within a changing
environment to the needs of markets and fulfill stakeholder
expectations.
Alfred Chandler - the determination of the basic long-term goals and
objectives of an enterprise, and the adoption of courses of action and
the allocation of resources necessary for carrying out these goals.
Bruce Henderson - the deliberate search for a plan of action that will
develop a business’s competitive advantage and compound it.
Michael Porter - the strong focus on profitability not just growth, an
ability to define a unique value proposition, and a willingness to make
tough trade-offs in what not to do.
Key focus of strategy
Strategy is concerned with the long-term direction of the firm.
•
•
•
•
Strategy deals with the overall plan for deploying the resources
that a firm possesses.
Strategy entails the willingness to make trade-offs, to choose
between different directions and between different ways of
deploying resources.
Strategy is about achieving unique positioning vis-à-vis
competitors.
The central goal of strategy is to achieve sustainable competitive
advantage over rivals and thereby to ensure lasting profitability.
Source: See also G. Johnson and K. Scholes (2002), pp. 39-46.
Goal of e-business strategy
Formulation
Environment
Goals
Market
positioning
Competitive
advantage
(Long-term)
success
Resource
exploitation
Resources
Implementation
Source: Adapted from H. Hungenberg (2006), p. 83
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3 main steps of e-business strategy
Mobile e-commerce strategy
E-business strategy
Strategy
Strategy formulation
implementation
12
Strategic
analysis
3
External
analysis
9
5
Internal
organisation
Strategy
options
Opportunities/
threats
Strengths/
weaknesses
4
Internal
analysis
6
Sustaining
competitive
advantage
8
7
Exploring
new market
spaces
Creating and
capturing
value
10
13
Interaction with
suppliers
Implementation
11
Interaction with
users/customers
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E-business strategy formulation
Key environmental/
industry developments
Opportunities
Strengths
Firm
characteristics
Weaknesses
Threats
• Do we have
the strengths to
seize possible
opportunities?
• Do we have
the strengths to
fend off possible
threats?
• Which opportunities
do we miss because
of our deficits?
• To which threats do
our weaknesses
expose us to?
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Net Commerce and Strategy
4 phases of Net commerce evolution
*not a single step!
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CommerceNet’s Views



An industry consortium at www.commerce.net
Buying and selling information, products, and
services (e-Commerce)
The use of inter-networked computers to create and
transform business relationships
(e-Business and e-Enterprise)


Internally: transfer and share information through intranets
to improve decision-making and eliminate duplication of
effort
Externally: part from transactions, also built on building,
sustaining, and improving relationships
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Reverse Engineering an implementation –
Vending Machine On-line




What are transformed?
How are they transformed?
Why do they need to be transformed?
Who will be affected in what ways?
Transforming a vending machine…
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e-Business – What are transformed?

Form of information and documents


E.g., invoice, customer information, contract, product catalog,
company news, payment records, …
Processes for managing, analyzing and using them


Functional perspective: accounting, sales and marketing,
production, design, human resource, …
Organizational perspective: Operational, Knowledge,
Management and Strategy
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Vending Machine Example


e-Commerce: Payment
e-Business:



Machine -> CocaCola warehouse for refill
CRM for where to put the machine and what to be
sold
Mobile payment solutions …
Transforming a vending machine
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Evolving Aspects in e-Transformation

Business Models


e-Application Categories


How to accomplish… ?
e-Application Functionalities


What is to be accomplished?
What is offered that helps to accomplish… ?
To support the vision and strategy of the
company

A Web-based system has no value by itself if it is not developed
with a strategic plan
=> Strategic Information System
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Focus of this course


NOT how to implement EC / EB functions
BUT to



ANALYZE the business requirements in the
perspective of strategic managment
FORMULATE suitable business models & strategies
CHOOSE suitable IT options (especially Webbased ones) to implement the strategies
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Reference
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Brochureware

Business Model (B2C)

Use the net as:



Customer interaction




key medium for global marketing
a low-cost repository of product and service information 
static documents and simple multimedia
reading text
view pictures
Transactions are performed over traditional means
Now, we still go the shops to buy most of our need…
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e-Commerce


Focus on consumer transactions and interactions over the
Internet
Business Model


Characterized by




buying and selling to consumers online (B2C)
the .com mania - lots of new companies operating online
content-aggregation business model - focus on consumer
founder and situation driven
Some success factors




Branding
Marketing
Personalization of service
Creation of customer community
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e-Commerce Functionalities & Examples

e-Tailing and Consumer Portal (CDNOW):


Bidding and Auctioning (eBay):


online catalogs, bid boards, account management, and notification
Consumer Care and Management (e-Trade):


online catalogs, personalization, advertising, shopping carts, and
online communities
personalization, self-service, immediacy, and information
Electronic Bill Payment (AT&T):

bill consolidation, analysis and reporting, payment processing, and
integration
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e-Business

Business Model



Characterized by




Focus on B2B applications over the Internet
evolve from well-established brick-and-mortar companies
seeking process improvement
focus on an organization’s core competencies
process aggregation oriented business model
process-driven; also technology-driven
Some success factors





create and integrate the right processes
agile applications
ability to integrate applications and data
right organizational structure
Means of overcoming political obstacles
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e-Business Functionalities & Examples

Virtual Marketplace (Dell)


Procurement & Resource Management
(MasterCard)


Request for info, request for proposal, requisitioning,
purchase orders, payment, and supplier management
Extended Value Chain (FedEx)


Catalog, buying tools, integration, and payment option, ..
Demand and supply planning, logistics, and production
planning
Customer Relationship Management (HP)

Self-service, solution-center, personalization, and account
management functionalities
COMP7880-Intro-25
SCM vs ERP vs CRM
Supplier
Supply
Chain
Mgmt
Manufacturer
Enterpris
e
Resource
s
Planning
Customer
Customer
Relationship
Mgmt
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e-Enterprise (1)


Convergence of B2C and B2B functionalities for those
who serve both market segments
New value chain  “Click and Mortar”


combining traditional bricks-and-mortar assets with the
efficiency of cybermediation
Co-opetitive virtual organizations
Supply side:
Procurement
of raw
material
cybermediation
Demand side:
consumer
retailing and
customer
management
COMP7880-Intro-27
e-Enterprise (2)

Complex combinations of internal and external
business processes and relationships with …
Suppliers
Customers
Distributors
Company A
Partners
Competitors
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e-Enterprise (3)

Business Model (B2C + B2B)


Applications



Based on people (role) aggregation
Focused on mission-critical, inter-organizational business
processes
CEO drives organizational changes
Results come out via iterative and methodological
efforts using technology (as an enabler and as a
commodity )
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e-Enterprise (4)

Value Proposition


more than manufacturing techniques or prime location outlets
Speed and Agility



Gained by leveraging existing asset base through the Net
Example 1, TimKin Corp. (bearings producer)
 Self-service answers to customer about product availability
and price (CRM) through linkage to the back-end inventory
database -> 15 percent service reps moved to sales
Example 2, AutoNation (automobile dealership network)
 Use an on-line infrastructure to channel leads to its physical
infrastructure of nationwise dealership.
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